Brokers are struggling alongside their clients to provide a good benefit package at a low cost with minimal hassle. A benefits administration platform can help with that hassle, but only if it is done right, Alex Tolbert, founder of BerniePortal, said last week at EBA’s Workplace Benefits Summit in Nashville, Tenn.
Benefit administration platforms as they stand today are a grouping of leading platforms that have done thousands of open enrollments, have thousands of employees using the systems and can deliver what clients want, he explained.
But what clients do not want is to build out their own platform, which would include loading plans and testing the system. “They expect a broker or a broker and tech platform to have it ready to go,” Tolbert said.
These platforms are at an “amazing moment in time for the industry,” he added. “For years, people have talking about benefits going online and we are at the beginning of it actually happening.” For context, nearly $1 billion has been pushed into HR tech in the last few years, Tolbert said.
Broker decision
A broker must decide if they want to let a client pick their own platform or the broker picks a platform and incorporates it into a value proposition that is provided to clients.
Tolbert believes that letting clients pick their own platform is a mistake because clients have different needs and to understand 15 separate systems will “be painful for your agency,” while a brokerage may be expected to serve all these platforms.
Additionally, “that same client [you] bent over backwards to assist picking the platform will blame you if it doesn’t work,” Tolbert added. “You can try your best to help them choose, but that is not what they want. They want a good benefit package, low cost and minimal hassle.”
Having a broker use their own platform also leads to increased ancillary revenue, he said. An average small employer is only offering health, dental, vision and life insurance. They are not offering other coverage due to cost, participation requirements and administration hassle. However, Tolbert said a broker’s own platform can overcome these obstacles by:
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- Cost: Defined contribution addresses this by carving out $10-$20 from medical or dental and makes it available on a menu of ancillary products. An online benefit system makes this easy, he said.
- Participation requirements: If 25% of plan participants do not enroll, the coverage does not take effect for anyone. In a benefits administration platform, a carrier waives this requirement.
- Administrative hassle: The online system handles collection, payroll integration and some platforms can generate online bills.
“Addressing these challenge is making small employers offer more array of benefits, such as cancer, STD, LTD, Cancer, Accident, ID theft protection and pet insurance,” Tolbert explained.
